[Federal Register Volume 60, Number 148 (Wednesday, August 2, 1995)]
[Notices]
[Pages 39363-39365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19016]
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DEPARTMENT OF COMMERCE
[C-549-401]
Certain Textile Mill Products From Thailand; Preliminary Results
of Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Preliminary Results of the Countervailing Duty
Administrative Review on Certain Yarn Products covered under the
Suspended Investigation on Certain Textile Mill Products from Thailand.
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SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of Certain Yarn Products covered under the
suspended countervailing duty investigation on Certain Textile Mill
Products from Thailand (``suspension agreement''). We have
preliminarily determined that for the period May 18, 1992, through
December 31, 1993, the signatories were not in violation of the
suspension agreement. Interested parties are invited to comment on
these preliminary results.
EFFECTIVE DATE: August 2, 1995.
FOR FURTHER INFORMATION CONTACT: Lisa Yarbrough or Jackie Wallace,
Office of Agreements Compliance, Import Administration, International
Trade Administration, U.S. Department of Commerce, Washington, D.C.
20230, telephone (202) 482-3793.
SUPPLEMENTARY INFORMATION:
Background
On November 23, 1990, the Department published in the Federal
Register (55 FR 48885) a notice terminating in part the suspension
agreement on Certain Textile Mill Products from Thailand (50 FR 9837,
March 12, 1985). On May 9, 1992, the Court of International Trade (CIT)
held that the Department's termination was not in accordance with the
law because the Department failed to strictly follow 19 CFR
355.25(d)(4). The Court of Appeals for the Federal Circuit (CAFC)
affirmed the decision of the CIT on October 12, 1993, and instructed
the Department to reinstate the suspension agreement. Subsequently, on
October 22, 1993, the Department reinstated the suspension agreement,
effective May 18, 1992, the date the Department published notice of the
CIT decision.
On March 4, 1994 , the Department published in the Federal Register
a notice of ``Opportunity to Request Administrative Review'' (59 FR
10368) of the suspended investigation for the period May 18, 1992 to
December 31, 1993. The Department received requests for an
administrative review of certain yarn products on March 31, 1994, from
the American Yarn Spinners Association (AYSA) and certain individual
yarn producers. On April 15, 1994, the Department initiated a
countervailing duty administrative review on Certain Yarn Products for
the period May 18, 1992 to December 31, 1993 (59 FR 18099, April 15,
1994). The Department verified the responses of the Royal Thai
Government (RTG) and the Thai Textile Manufacturers Association (TTMA)
from January 16 through January 25, 1995 pursuant to the administrative
review.
Due to prior analysis of interested party status of AYSA in 1990,
the Department initiated this review on certain yarn products only for
the period May 18, 1992, through December 31, 1993 (FR 59 18099, April
15, 1994). The review covers nine programs and eight producers/
exporters: Saha Union, Venus Thread, Union Thread, Union Spinning, Thai
Melon, Thai American, Thai Blanket, and Thai Synthetic.
Applicable Statue and Regulations
The Department is conducting this administrative review in
accordance with section 751(a) of the Tariff Act of 1930, as amended
(the Act). Unless otherwise indicated, all citations to the statute and
to the Department's regulations are in reference to the provisions as
they existed on December 31, 1994.
Scope of Review
Imports covered by this review are shipments of certain yarns from
Thailand. During the period of review, such merchandise was
classifiable under the Harmonized Tariff Schedule (HTS) item numbers
5204.11.0000, 5204.19.0000, 5204.20.0000, 5206.21.0000, 5206.22.0000,
5206.23.0000, 5206.24.0000, 5206.25.0000, 5206.41.0000, 5206.42.0000,
5206.43.0000, 5206.44.0000, 5206.45.0000, 5207.10.0000, 5207.90.0000,
5401.10.0000, 5402.31.3000, 5402.32.3000, 5402.33.6000, 5406.10.0020,
5406.10.0040, 5406.10.0090, 5508.20.0000, 5510.12.0000, 5510.90.4000,
and 5511.30.0000.
Analysis of Programs
1. Electricity Discounts
Under Section II(b) of the suspension agreement, the producers and
exporters are not to apply for, or receive, any discount on electricity
rates provided by the electricity authorities of Thailand (the
Electricity Generating Authority of Thailand (EGAT), Metropolitan
Electricity Authority (MEA) or the Provincial Electricity Authority
(PEA)) for exports of subject merchandise.
EGAT is the general producing authority of electricity in Thailand
selling to regional authorities such as MEA and PEA. PEA and MEA in
turn sell electricity to companies in their jurisdiction. This program
was
[[Page 39364]]
terminated effective January 1, 1990. However, producers and exporters
who applied for discounts on exports prior to January 1, 1990, are
still eligible to receive residual benefits on those exports.
Based on our verification, we found that neither EGAT, MEA, or PEA
provided residual benefits during the POR on exports of subject
merchandise to the United States. See verification report dated June 1,
1995.
2. Repurchase of Industrial Bills
Under Section II(f) of the suspension agreement, the producers and
exporters are not to apply for, or receive, any promissory notes from
the Bank of Thailand (BOT) for exports of subject merchandise to the
United States.
In 1988, this program was changed from ``Rediscount of Industrial
Bills'' to ``Repurchase of Industrial Bills'' (see ``Notification of
the Bank of Thailand #2531 re: Repurchase of Industrial Bills 1988'').
Under this program, companies can receive discounted financing for
working capital on industrial bills for a period of 120 days. This
program operates similarly to the Export Packing Credit Program where
companies can receive financing from a commercial bank or the
Industrial Finance Corporation at interest rates of 10% or less. The
BOT will then repurchase 50% of the bills from the commercial bank or
Industrial Finance Corporation.
Based on our verification, we found the signatories subject to this
review were not among those that applied for, or received, industrial
bills for exports of subject merchandise to the United States during
the POR. See verification report dated June 1, 1995.
3. Investment Promotion Act: Section 28, 31, 35, and 36
Under Section II (i) of the suspension agreement, the producers and
exporters are to notify the Department in writing prior to applying
for, or receiving, benefits under the Investment Promotion Act on
shipments exported to the United States.
The Investment Promotion Act of 1977 (IPA) is a general act,
administered by the Board of Investment (BOI), that allows for the
promotion of different industries selected for development assistance
by the BOI. Under this program, producers and exporters must be granted
a BOI license which enables them to receive various IPA benefits. Such
benefits include the following:
Section 28--IPA Section 28 provides an exemption from payment of
import duties on imported machinery.
Section 31--IPA Section 31 provides an exemption of juristic person
income tax on the net profit derived from the promoted activity.
Section 35--IPA Section 35 provides certain income tax benefits to
firms located in investment promotion zones.
Section 36 (1)--IPA Section 36(1) allows companies an exemption
from import duties on raw and essential materials used to produce goods
for export.
Section 36 (4)--IPA Section 36(4) grants companies permission to
deduct from taxable income an amount equal to 5% of the increase in
export earnings over the previous year.
Based on our verification, we found no indication of signatories
receiving benefits under these programs during the POR. See
verification report dated June 1, 1995.
4. International Trade Promotion Fund
Under Section II(h) of the suspension agreement, the producers and
exporters are to notify the Department in writing prior to applying for
or accepting any new benefit which is, or is likely to be, a
countervailable bounty or grant on shipments of subject merchandise
exported, directly or indirectly, to the United States. Although the
Department has never determined this program to be countervailable, we
reviewed this program in the administrative review.
This program, governed by the ``Rule on Administration of the
International Trade Promotion Fund (ITPF), B.E. 2532 (1989),'' promotes
and develops Thai exports worldwide through incoming and outgoing trade
missions. The ITPF provides training and seminars for exporters, and
publicity through public advertisements.
Based on our verification, we confirmed that Saha Union and its
relateds (Union Spinning, Union Thread, and Venus Thread) participated
in an international trade fair, promoting subject merchandise. Saha
Union and its related companies paid their own expenses to participate
in the trade fair. See verification report dated June 1, 1995.
5. Export Processing Zones
Under Section II (i) of the suspension agreement, producers and
exporters shall notify the Department in writing prior to making an
application to locate in an Export Processing Zone.
This program is governed by the ``Industrial Estates Authority of
Thailand Act, B.E. 2522, 1979.'' Under this program, a company must
apply to the Industrial Estate Authority of Thailand (IEAT) for
permission to locate in an export processing zone (EPZ). All EPZ's are
located inside an industrial estate. Companies located within an EPZ
can receive import duty exemptions on equipment and raw materials, and
exemption of export duties on exported goods.
Based on our verification, we found no use of this program by
signatories to the suspension agreement. See verification report dated
June 1, 1995.
6. Duty Drawback
Under Section II (c) of the suspension agreement, exporters and
producers are not to apply for, or receive, rebates on shipments of
subject merchandise in excess of the import duties paid on items that
are physically incorporated into exported products.
Under this program, Thai Customs will refund import duties paid on
imported goods used in the production of an exported product. In order
to qualify for duty drawback, the goods must be exported through an
authorized port, the exports must be shipped within one year of the
date of importation of the goods on which drawback is claimed, and the
producer/exporter must request drawback within six months of the date
of exportation of the goods.
During the POR, Saha Union, Union Spinning, Union Thread, Venus
Thread, and Thai Melon used duty drawback on exported goods of subject
merchandise to the United States. Based on verification, we found that
the amount of drawback received was not in excess of the items
physically incorporated into the exported product. See verification
report dated June 1, 1995.
7. Double Deduction for Foreign Marketing Expenses
Under Section II (e) of the suspension agreement, the producers and
exporters are not to apply for, or receive, the double deduction of
foreign marketing expenses for income tax purposes or financing on
concessionary terms from the BOT on exports of subject merchandise.
From 1978 through 1981, the BOI granted trading companies a benefit
on the double deduction of foreign marketing expenses from taxable
income. In order to receive this benefit, a company had to be promoted
through the BOI. This program was terminated in 1981 ``BOI Announcement
No. 1/2524.''
Based on verification, we found no use of this benefit. See
verification report dated June 1, 1995.
8. Tax Certificates
Under Section II (c) of the suspension agreement, the producers and
exporters can apply or receive tax certificates on shipments of subject
merchandise
[[Page 39365]]
exported directly or indirectly to the United States for import duties
paid on items that are physically incorporated into exported products.
If the producers and exporters apply for tax certificates in excess of
the items physically incorporated, the suspension agreement requires
that the producers and exporters repay to the RTG, in an annual
adjustment, the amount in which the tax certificates exceed the import
duties on physically incorporated inputs.
Tax certificate applications are made on a shipment by shipment
basis after the producer/exporter receives payment for its shipment.
The application can include up to 10 shipments and must be submitted
within one year of the shipment date. Exporters can apply for an
extension if they do not meet the one year deadline.
The law governing this program is the ``Tax and Duty Compensation
of Exported Goods Produced in the Kingdom Act, B.E. 2524 (1981).''
Effective January 1, 1992, new nominal rebate rates were established
for all products by the Committee on Tax and Duty Rebates for Exported
Goods Produced in the Kingdom. The new nominal rates applicable to
signatories are categorized by the following sectors: spinning,
weaving, made-up textile goods, and knitting. Because nominal rates are
in excess of the physically incorporated inputs, the Department has
calculated, and requested that the RTG implement non-excessive rates.
See verification report dated September 15, 1994, and letter from
Roland L. MacDonald to Arthur J. Lafave III dated November 15, 1994.
Thai Melon, Thai American, Thai Synthetic, and Thai Blanket have
applied for tax certificates at nominal rates during the period of
review (POR). The Department will require that these companies repay
the RTG, in an annual adjustment, the amount in which the tax
certificates exceed the import duties on physically incorporated
inputs. See verification report dated June 1, 1995.
9. Export Packing Credits
Under Section II (a) of the suspension agreement, the producers and
exporters are not to apply for, or receive, Export Packing Credits
(EPCs) from the BOT that permit the rediscounting of promissory notes
arising from shipments of subject merchandise to the United States.
EPCs are pre-shipment short-term loans available to exporters for a
maximum of 180 days from the date of issuance. Under the EPC program,
commercial banks issue loans based on promissory notes from
creditworthy exporters. Such notes have to be supported by an
irrevocable letter of credit, a sales contract, a purchase order, or a
warehouse receipt. The commercial bank will then resell 50% of the
promissory note to the BOT at a lower interest rate. The maximum
interest rate a commercial bank can charge the exporter is 10% per
annum.
If an exporter does not fulfill the contract by the due date of the
EPC, the BOT will automatically charge the commercial bank a penalty
interest rate. The commercial bank will then pass this penalty onto the
exporter. The penalty interest rate is 6.5% per annum calculated over
the full term of the loan. However, penalties can be refunded if the
exporter ships the merchandise within 60 days after the due date. If
only a portion of the goods is shipped by the due date, the exporter
receives a partial refund in proportion to the value of the goods
shipped.
Based on our verification, we found that Thai Melon and Thai
American did use this program for exports of certain yarns to the
United States during the review period. See verification report dated
June 1, 1995.
The Department has calculated a subsidy rate for EPCs received by
Thai Melon and Thai American for this administrative review. We first
computed the total benefit received on the export packing credits. We
then calculated a company specific subsidy rate for Thai Melon and
included Thai American in the company rate because it is a related
party . Next, we weight-averaged the benefit rate received by the
company by its share of total exports of subject merchandise to the
United States. The net subsidy received on EPCs for this administrative
review is 0.19%.
Preliminary Results of Review
As a result of our review, we preliminarily determine that for the
period May 18, 1992 through December 31, 1993, the signatories were not
in violation of the suspension agreement. Due to the unusual
circumstances surrounding this case and the reinstatement of the
suspension agreement, we do not consider the calculation of EPCs in
this POR to constitute a violation of the agreement within the meaning
of 19 CFR Section 355.19 (d)(1994). However, we note that Section II
(a) of the suspension agreement prohibits participation by any
signatory in the EPC program at noncommercial rates and terms for
subject merchandise. Thus, in future reviews, the signatories shall
follow Section II (a) of the suspension agreement or they will be found
in violation of the agreement.
For those signatories who received tax certificates in excess of
the import duties paid on items physically incorporated into exports of
subject merchandise, we will require that they repay to the RTG, in an
annual adjustment, any amount by which the tax certificates exceed the
amount of import duties on physically incorporated inputs. The annual
adjustment shall be calculated in accordance with Section II c(i)(ii)
of the suspension agreement.
Parties to the proceeding may request disclosure of the calculation
methodology and interested parties may request a hearing not later than
10 days after the date of publication of this notice.
Interested parties may submit written arguments in case briefs on
these preliminary results within 30 days of the date of publication, in
accordance with 19 CFR 355.38(c)(1994). Rebuttal briefs, limited to
arguments raised in case briefs, may be submitted seven days after the
time limit for filing the case brief, in accordance with 19 CRF
355.38(d)(1994). Any hearing, if requested, will be held seven days
after the scheduled date for submission of rebuttal briefs (19 CRF
355.38(f)(1994)). Copies of case briefs and rebuttal briefs must be
served on interested parties in accordance with 19 CRF 355.38(e)(1994).
Representatives of parties to the proceeding may request disclosure of
proprietary information under administrative protective order no later
than 10 days after the representative's client or employer becomes a
party to the proceeding, but in no event later than the date the case
briefs, under 19 CFR 355.38(c)(1994), are due. The Department will
publish the final results of this administrative review including the
results of its analysis of issues raised in any case or rebuttal brief,
or at a hearing.
This administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)(1994)) and 19
CFR 355.22(1994).
Dated: July 26, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-19016 Filed 8-1-95; 8:45 am]
BILLING CODE 3510-DS-P